Posts Tagged ‘ Innovation ’

Your advertising message needs to be in front of as many people as possible.  But reaching out to everyone is cost prohibitive.

The art of advertising effectively is to segment the population and find out what your ideal customer looks like so you can pay just to be in front of them.  If it cost a dollar to reach out to one person, it would cost $310,000,000 to reach everyone in the United States – once.

Whatever you sell, that probably isn’t going to be effective.  Coca-Cola doesn’t reach out to people once.  (They are one of few companies that reach out to everyone, though.  You can do that when you had revenue of $31 billion in 2009.)

Once you have segmented your market, you need to spread the word.  But you might be disappointed that one of the modern “laws” of marketing is wrong: Sex doesn’t sell.

I know what I said last week.  It still applies in most situations.  But in a climate of disruptive innovations, listening to your customers can cost you industry leadership.

Your customers know what they need now.  But if you always base your plans off of what your customers think they want in the future you will lose your position of industry leadership.

Your customers are chasing markets with higher sales and higher margins.  They should and you should.  But there are new businesses trying to expand from their markets to yours.

An example from the steel industry over the last 20 years in the United States is a prime example of this problem.

I happened across one of the most brilliant advertisements today.

A friend passed it along to me on Facebook.  All you have to do is “Like” the Redbox page and you get a password for a free one night movie rental on June 21st.  Redbox wants people on their “Like” page (at 622,000+ as I type this).  People want free movie rentals. Of course I will share the location for your free movie (below the fold).

One of my biggest fascinations lately has been the role of creativity in business.

I’m not talking about creative accounting.  That can cause serious legal and ethical problems.  You just don’t want to go there.

Everyone in business has creativity.  The evidence is that the best jobs people will have 10 years from now haven’t been invented yet.  Business is about creating something.

An example will show what I mean.  My mom is a veterinary surgeon.  She claims she isn’t really creative.  But then I asked about how she solves some problems with the animals she works on.  It turns out she does have to be creative to solve some of the problems she runs across.

Innovation is the key to success.  But where do you look for it?

One way to learn about innovation is to look at the fastest growing companies in the world.  Usually, these are the guys who get venture capital funding.  They are looking for fast growth and a five to seven year payout.

Amar Bhidé does a study (on the macroeconomic level) of these high growth VC funded companies in The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World.

Bhidé points out that over the last 100 years, “the nontraded sector has increased from 60 percent to about 80 percent of GDP” (Bhidé  298).